Huge gaps in UK regulation post-Brexit

The UK is still not in a position to assume responsibility for regulation in several critical policy areas including trade, crime and the environment, a new academic report has found.

The report ‘UK regulation after Brexit’ finds that the UK was ill-prepared when responsibility for regulation switched from the EU following the end of the transition period. The UK does not have the physical or IT infrastructures in place to manage trade in its new relationship with the EU and is relying on transitional arrangements to make the system work.

UK regulators are still not ready to take on their new responsibilities the report, by UK in a Changing Europe, the Centre for Competition Policy, and Brexit & Environment, finds.

In the environment, the UK left the EU’s European Environment Agency but the UK Office for Environmental Protection has still not opened, leaving the UK without a body to monitor government action or scrutinise compliance with environmental law.

Many UK authorities are not adequately equipped compared to the EU bodies they replaced. Staffing and budget are an issue, but UK bodies lack powers in inspection and enforcement too. They have also lost access to data crucial to the police and border control. Europol databases had been consulted more than 500 million times a year by UK authorities, and the Metropolitan Police made more than 100,000 requests for information from the European Criminal Records Information System.

The report also raises important question marks about costs and duplication.

In chemicals and aviation, UK regulators replicate the same functions that are performed by EU bodies and in those industries, which are both heavily regulated, it will be a tall order for UK authorities to develop the same levels of expertise as the EU bodies they replace.

UK businesses wanting to operate in both the UK and the EU will have to submit to the same bureaucracy twice. In chemicals, industry will have to cover the costs of testing and registration a second time, estimated at a total of £1bn, when they only recently paid for the creation of the EU system.

Unfinished business

The report, also describes how the UK EU deal leaves significant ‘unfinished business’. There are grace periods for customs formalities, issues where the UK and the EU still need to reach agreement, and transitional arrangements where the terms of the UK’s withdrawal from the EU are not yet decided and where the full effects have yet to be felt.

A future review of energy is linked to how well the new arrangements play out in fisheries, while the entire agreement will be reviewed every five years.

The report concludes that the UK’s decision to leave the single market and the customs union was driven by a determination to gain regulatory autonomy at all costs. But, in practice, the UK is unlikely to be able to diverge over the long term.

The UK is bound by the terms of the Trade and Cooperation Agreement and highly dependent on trade with the EU and the UK is constrained by wider international laws and conventions. The EU is a global standard setter in many areas, so if the UK were to diverge from these standards it is likely to disadvantage businesses in the country.

Professor Hussein Kassim, Senior Fellow of UK in a Changing Europe, said: “The report shows that the challenges facing the UK following the end of the transition are not merely teething problems.

“The UK has assumed huge regulatory responsibilities, but it is not clear that UK regulators are sufficiently powerful, have the right resources or can develop the necessary expertise to perform effectively even in the medium-term. Although the UK has gained regulatory autonomy in theory, it faces formidable constraints to diverge in practice.”